Are You Using the Correct Transport Document for Shipping Goods Under the EXW or FCA Incoterm Rules?
Use of the wrong transport document could result in unexpected costs and liability for the seller by extending responsibilities beyond the definition of the incoterm rule. Incoterm @2010 requires the buyer to provide the seller with appropriate evidence of having taken delivery of the goods, not the seller providing evidence of the transport of the goods.
- Why does it matter?
- What do you need to know about FCA or EXW Incoterm© 2010 Rules? Under the EXW rule, the only correct transport document is a courier receipt provided by a door to door international courier/freight service. EXW obliges the carrier to load the inland conveyance and at that time provide the appropriate evidence to the seller in the form of a courier receipt.
The FCA incoterm rule requires the seller to load the goods on the inland carrier. If the buyer took possession or delivery of the goods when loaded, then the appropriate evidence should be a Forwarder’s Cargo Receipt (FCR), inland bill of lading or other relevant loading/delivery document signed off by the carrier and provided to the seller upon loading.
- What if the LC requires an Air waybill or Ocean bill of lading instead?
The LC should be amended to change the transport document to either a Courier Receipt por a Forwarders Cargo Receipt (FCR). Why? Because the shipper’s liability is now extended beyond the release and loading of goods on the inland carrier to the actual loading of the international carrier. This is unregulated territory.
- What could go wrong?
1. The goods are lost or damaged in transit to the international carrier These are the consequences that could occur:
- The buyer failed to secure the insurance prior to loading the inland conveyance and damages will revert to the seller.
- he inability to secure a clean AWB or OBL due to the visible damage or loss of goods resulting in a LC discrepancy and sending documents on approval to the buyer.
- The inability to secure an accurate AWB or OBL by non-compliance of the forwarder or carrier to the LC requirements.
- The seller may not be able to obtain the AWB or OBL at all. If the goods are lost or stolen in route to the international carrier then a valid transport document will not be forthcoming. Without the transport document there will be a total loss of goods and funds.
2. There is a delay loading the goods on the international carrier. If time restraints are close, the delay may create a failure to ship by the latest shipment date on the LC.
Avoid unnecessary risks by taking the time to verify that correct transport document has been applied to your EXW or FCA shipment. You will save yourself unforeseen headaches and there will be no surprises with a negative impact in your bottom line!
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Written by Sherri Lane